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SA considers privatisation to counter recession

Government will also reduce the issuance of guarantees to SOEs, Gigaba says.

JOHANNESBURG – South African Finance Minister Malusi Gigaba laid out an ambitious 14-point programme on Thursday to wrench the economy out of recession that included the sale of non-core assets and partial privatisation of state-owned firms.

The plans to stimulate growth in the continent’s most industrialised economy appear to represent an ideological shift by the African National Congress (ANC), whose political alliance with the unions has tended to make privatisation a dirty word.

A team commissioned by President Jacob Zuma to review state firms last year recommended that some should be sold. Now the government has set a date – March 2018 – by which to roll out a “private sector participation framework”.

“All of these items that we have announced … they constitute an important intervention to restore confidence and demonstrate action, and outline an action plan that we as government can be responsible for,” Gigaba said.

The government would also reduce the number of debt guarantees to this firms, especially those extended for operational purposes, he said.

Analysts said Gigaba’s plan could face opposition.

“I’m not sure how far he is going to be able to get with this because I think ideologically there’s a lot of opposition,” NKC African Economics analyst Gary van Staden said.

“The last time I heard the ANC even talk about privatisation or even talk about sale of state owned assets on any kind of level is when Thabo Mbeki was president. It’s been a long time.”

South Africa’s economy entered recession for the first time since 2009 in the first quarter and is also struggling with high unemployment and credit ratings downgrades.

The state of the economy is adding to the pressure on Zuma, who is also facing persistent corruption allegations and increasing calls for him to stand down from within the ANC. Parliament will hold a no-confidence vote on Zuma next month.

Many of South Africa’s 300-odd state-owned companies are a drain on the government’s purse. Ratings agencies have singled out some as threat to its overall investment grade rating.

The firms, known as “parastatals” in South Africa, include companies such as South African Airways, power utility Eskom and logistics group Transnet that are regarded as central to the functioning of the economy.

Gigaba did not say what would be going under the hammer first, saying that would be determined by an audit.

BNP Paribas South Africa economist Jeff Schultz said investors would want to see more details before endorsing it as a viable turnaround strategy.

“It’s very difficult to say at this stage. He was quite cagey on what sales of non-core assets he was referring to,” Schultz said.

South Africa sold its stake in mobile phone firm Vodacom in 2015 to as part of a R23 billion capital raising for Eskom.

Schultz said it might try to sell similar stakes, rather than embracing formal privatisation.

“In much the same way as government sold down their stake in Vodacom, the government is looking to do similar things to try and raise some revenue in the near term,” he said.

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Please minister Gigaba, do not forget to put a curb on the KFC purchases.

He’s bound to “foul” that up too!

Bob123, for Gigaba to understand the word “fowl” should replace “foul”. These Gupta deployees have only one mindset and that is self enrichment at the expense of the poor.

Yo!! More competition and trouble on the way. Popeye has just opened!

Don’t you mean Gucci suits? Gigaba’s wardrobe costs more than his supposed salary. How do you think he explains that? Is he a luxury brands role model? Maybe a Gucci fit model?

Of course, with all the race-related rules that they will inevitably be sold with and the future random rule changes by incompetent officials that we can expect AND all the useless ANC cadres making up their staff they will be worth a tiny fraction of their original potential value.

IMO you’d have to be nuts to buy into any of them.

Partial privatization will flop.

Only 100% unfettered sale will have a positive impact on the economy.

But’s impossible to sell it as unfettered if the government can and will change the rules long after the sale, randomly as the populist wind blows.

Don’t forget that the “100% unfettered sale” will include graft as well! There is no win – win situation with the deployed cadres.

Inspiring words. Unfortunately if history repeats itself it is all lip service just to get some investors coming back and than you want to take it away and nationalise or give it to the next Gupta’s Inc. ANC has no credibility left……But Good luck!!!

As trusted as a waiting fart after a vindaloo curry

Really? – and how will you guarantee private sector investment with your shocking and profligate management of SOE’s to date Gigaba?

My “capital” will remain safely off shore where people know how to respect it and grow it!

If one of the points on his plan was to resign until all reasonable doubt on his involvement with the Gupta’s was resolved and proved not to one the case, then I would believe him. Now so long as his motor mouth is moving I will wonder if any thing he sprouts from his jaw is truthful or even sincere.

SA Cabinet considers dressing in sack cloth and ashes to counter perceptions of arrogance.

All just ANC talktalktalkblahblahblahwaffleblahhhhhhhhhhhhhhhtalketcetc.In meantime nothing happens to Dear Dudu who stuffed up SAA and the KZN water Boards and Bathobile Dlhamini and Ben Ngubane and Molefe gets R30 m for mahala etcetc.

they don’t know which way anymore…all I know is that the money reserves are finally gone.

14 point program ? laughable. just get rid of the sole problem that is causing all the mess/chaos/sorrow/ desperateness/ hatred…

It’s quite simple really; they can’t govern a country nor develop and manage a sophisticated economy. It’s way beyond their ability. Everything they touch is bound to fail as so perfectly illustrated these past two decades.

Mr Gigaba,if you’d sold all SOE’s before junk status,then SA would’ve reaped a great bounty.Now,pnly fire sale prices will be offered.

I am truly amazed at the fact that he has gone for a 14 point program especially given the presidents penchant to pronounce such large numbers. The ANC should have no plans which are more complex than the number of fingers they have on 2 hands.
Can’t wait for the first due date to be missed by these talking heads

First on the list should be SAA. Second on the list is Eskom. Give independent energy producers full access to provide us with electricity too!! Gosh I hope this isnt just political talk to try and garner votes for 2019. We need change and we need ASAP!!

Malusi’s Bosses will so proud of him now, he has finally put that favourite topic of theirs on the agenda, using the recession as an excuse: He might as well hang a sign for all to see, that:


There will be a toast ceremony in Saxonwold, including extra blue cheese, and caviar and arugula for those discerning palates of newly coined Gupta Home Made Dollar Millionaires.

But we’ve heard this story from Mr Gordhan before – SAA will form partnerships with private sector – all that stuff, don’t believe it and in any case too little, too late!

Please note: SAA is a CORE asset (according to ANC-speak.) Even if the ANC finds out belatedly it’s NOT, who would want to pay even a penny for the airline anyway? Debt far outstrips its assets! Planes can go on auction soon!

10 bucks says they’ll INSTRUCT “WMC” to buy these firms (at pain of losing mineral etc rights) at an ANC-decided price but whilst at the same time giving most of the purchased shares to chosen BBEEE types.

I think that sounds crazy enough to be ANC policy.

How can he privatize what has been handed to the Guptas?

Sounds like a ruse for the minister to sell (give) part of the parastatals to entities controlled by himself & the Gupta’s. No investors are buying parastatal bonds so why would they buy equity? Gigaba is too dishonest to do anything but a corrupt deal

I suppose the 15th point non his rescue plan is to move your own assets off shore?

Sounds good. The ruling party should privatise the government. Imagine the turn around if SA is being run by a dynamic CEO.

Gigaba is fooling us. We are loosing focus. The gupta’s must be our focus. We must get rid of them.

The very same applies to Busi and Zwane. They are manipulators and experts in graft.

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